Independent medical reviews come at a price

Independent medical reviews have helped reduce unnecessary medical treatments for injured workers, but there is worry that costs could increase since the independent reviews are being requested more often than expected.

“The employer community has benefitted, but at a price for the cost of the review, which is not exactly cheap if it is just over a dispute over the declination ... of a prescription,” said Zachary Sacks, managing partner at Culver City, California, law firm Sacks & Zolonz L.L.P.

Under California workers comp reforms passed in 2012, injured workers can request independent medical reviews to dispute treatment that was modified or denied under utilization reviews, which employers and insurers request.

Such disputes previously were decided in court. Insurers and employers pay for independent medical reviews.

“From a cost savings perspective, the indicators all point to a high likelihood that inappropriate care is consistently being denied” and the findings are being upheld, said Joseph Paduda, principal of Health Strategy Associates L.L.C., Madison, Connecticut.

But experts say the frequency of independent medical reviews is preventing the system from achieving its full cost-savings potential.

“We're getting so many more IMR requests than were anticipated,” Mark Sektnan, president of the Sacramento-based Association of California Insurance Companies, said in an email.

The California Workers' Compensation Insurance Rating Bureau in Oakland said in a November report that the frequency of independent medical review requests through the third quarter of last year was “far above the levels initially projected.”

The CWCI said in February there were 163,826 independent medical review determinations in 2015, up nearly 19% from 2014.

Employers and insurers were expected to pay $60 million for independent medical reviews in 2015, with the fees expected to increase loss adjustment expenses by 2.4%, according to the WCIRB.

“It hasn't produced the savings in frictional costs as we were anticipating,” said Dave Bellusci, WCIRB executive vice president and chief actuary. “So while the hope was that some of the frictional costs would drop with ... the IMR process, we haven't seen that.”

William Zachry, vice president of risk management at grocery store chain Safeway Inc. in Pleasanton, California, who worked on the reform bill, said he views independent medical reviews favorably despite the costs to employers. That's because they appear to prevent doctors from using non-evidence-based practices to treat injured workers, he said.

The “overwhelming numbers are that it is working and is reducing the costs of the system through improved care for the injured workers,” Mr. Zachry said in an emailed statement.

Cost reductions over time?

Sources are hopeful the independent medical review process will reduce some comp costs in the long run.

The WCIRB said in November that independent medical reviews and other provisions of California's comp reforms produced $770 million in annual savings for the state's workers comp system so far.

“My strong belief is that the IMR, medical guidelines and (utilization review) processes will lead to a significant reduction in adverse medical events, extended disability and, therefore, costs to employers and the taxpayers,” Mr. Paduda said.